Oil falls as growing coronavirus cases stoke fuel demand worries

CNBC

Reuters
KEY POINTS
  • Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.
  • Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Crude prices fell on Friday as the resurgence of the coronavirus globally and in the United States, the world’s largest oil consumer, dimmed the prospects of fuel demand recovery.

Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT, and U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.

Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.

Increases in the daily cases of the coronavirus, however, globally and in the United States pressured prices. New U.S. COVID-19 cases rose by more than 50,000 on Thursday, setting a record for a third consecutive day, according to a Reuters tally.

“The market has become increasingly confident that easing restrictions on travel and business would boost demand for crude oil, but the pandemic’s progress threatens to derail this recovery,” ANZ Research said in a note.

“The recovery in gasoline demand will plateau until the U.S. economy improves,” it said.

Gasoline demand will be closely watched as the United States heads into its July 4 holiday weekend as many Americans are expected to hit the road.

U.S. gasoline stocks rose by 1.2 million barrels in the week to June 26, according to data from the Energy Information Administration released on Wednesday.

Oil prices slip on demand fears as U.S. virus cases surge

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell 10 cents, or 0.3%, to $39.72 a barrel at 0148 GMT, trimming a 1.4% rise from Wednesday.
  • Brent crude futures eased 6 cents, or 0.1%, to $41.97 a barrel, after rising 1.8% in the previous session.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices dipped on Thursday after the United States recorded its biggest one-day spike in coronavirus cases and California reimposed some lockdown measures, stoking worries a resurgence in COVID-19 cases will stall a recovery in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures fell 10 cents, or 0.3%, to $39.72 a barrel at 0148 GMT, trimming a 1.4% rise from Wednesday.

Brent crude futures eased 6 cents, or 0.1%, to $41.97 a barrel, after rising 1.8% in the previous session.

California sharply rolled back efforts to reopen its economy on Wednesday, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures as COVID-19 infections surged.

Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country’s biggest consumers of gasoline.

New U.S. COVID-19 cases rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic. More than half the new cases each day are in Arizona, California, Florida and Texas.

Oil prices rose in the previous session after U.S. Energy Information Administration data showed U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, as refiners ramped up production and imports eased.

However, analysts noted the data also showed gasoline stockpiles rose due to a sharp increase in imports, against expectations for inventories to fall.

“Counter-seasonal builds in gasoline inventories as stockpiles unexpectedly rose are not precisely a bullish delight,” AxiCorp strategist Stephen Innes said in a note.

“The EIA data showed that gasoline imports hit the highest level since last August and peaked the most on a seasonal basis in nine years.”

All eyes will be on driving activity in the United States over the upcoming July 4th holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.

Oil prices fall further on virus fears, U.S. crude stock build

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell 26 cents, or 0.7%, to $37.75 per barrel at 0245 GMT on Thursday, after dropping $2.36 on Wednesday.
  • Brent crude futures fell 30 cents, or 0.7%, to $40.01 per barrel after falling $2.32 on Wednesday.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices slipped on Thursday, extending losses of more than 5% in the previous session, weighed down by record high U.S. crude inventories and worries that a rapid resurgence in Covid-19 cases could choke a revival in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures fell 26 cents, or 0.7%, to $37.75 per barrel at 0245 GMT on Thursday, after dropping $2.36 on Wednesday.

Brent crude futures fell 30 cents, or 0.7%, to $40.01 per barrel after falling $2.32 on Wednesday. A day earlier, the benchmark contract hit its highest price since early March, just before pandemic lockdowns and a Saudi-Russian price war slammed markets.

Wednesday’s selloff came after U.S. government data showed crude stockpiles rose by 1.4 million barrels, driving inventories to a record high for a third straight week last week.

Analysts, however, said that was mostly due to a flotilla of Saudi cargoes booked by U.S. refiners when prices slumped in March. Those shipments are due to ease soon.

Worries about a second wave of Covid-19 cases in several U.S. states, where lockdowns had eased, and a rapid spread of infections in South America and South

Asia are expected to keep a lid on fuel demand, market watchers said.

“The latest trends there are not encouraging,” said National Australia Bank’s head of commodity research, Lachlan Shaw.

The fear is that even if lockdowns are eased, people will stay home because of the perceived health risks.

Stephen Innes, market strategist at AxiCorp, said mobility data from Google showed driving in Texas, Florida and to a certain extent California was flatlining.

In another reminder of fuel demand woes, Australia’s flagship airline, Qantas Airways, said on Thursday it expected little revival in international travel until at least July 2021, as it slashed a fifth of its workforce and grounded 100 planes.

“It highlights the reality that we’re talking years before international aviation recovers — probably three to four years,” Shaw said.

Oil prices inch up on faith in supply cuts, demand recovery

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures climbed 14 cents, or 0.4%, to $38.98 a barrel at 0101 GMT.
  • Brent crude futures crawled up 7 cents, or 0.2%, to $41.58 a barrel. Both contracts rose around 2% on Thursday.

Oil prices pushed higher in early trade on Friday, building on gains in the previous session, after OPEC producers and allies promised to meet their supply cut commitments and two major oil traders said demand was recovering well.

U.S. West Texas Intermediate (WTI) crude futures climbed 14 cents, or 0.4%, to $38.98 a barrel at 0101 GMT, while Brent crude futures crawled up 7 cents, or 0.2%, to $41.58 a barrel. Both contracts rose around 2% on Thursday.

Plans by Iraq and Kazakhstan to compensate for overproduction in May on their supply cut commitments supported the market. The promises came out of a meeting by a panel monitoring compliance by the Organization of Petroleum Exporting Countries and its allies, a grouping called OPEC+.

If the laggard producers do compensate over the next three months for their overproduction, that will effectively take extra barrels out of the market, even if OPEC+ does not extend its record 9.7 million barrels per day supply cut beyond July.

Comments from global oil traders Vitol and Trafigura on a rebound in oil demand in June, reported by Bloomberg, also buoyed the market, ANZ Research said.

Trading volumes on Friday, however, were thin, which pointed to a lack of conviction behind any big push higher, said CMC Markets chief strategist Michael McCarthy.

On the technical side, he pointed to strong resistance in the WTI contract between $40 and $41. Analysts see that level as the point at which more U.S. producers will revive shut-in wells.

“That militates against aggressive long side trading,” McCarthy said.

Oil drops as new coronavirus outbreaks raise fuel demand concerns

CNBC

Reuters
KEY POINTS
  • Brent crude futures fell 89 cents, or 2.3%, to $37.84 a barrel by 0302 GMT, while U.S. West Texas Intermediate crude futures were down $1.18, or 3.3%, to $35.08 a barrel.
  • The oil benchmarks fell about 8% last week, their first weekly declines since April.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil fell more than 2% on Monday, extending losses from last week, as new coronavirus infections hit China and the United States, raising the prospect that renewed outbreaks of the virus could weigh on the recovery of fuel demand.

Brent crude futures fell 89 cents, or 2.3%, to $37.84 a barrel by 0302 GMT, while U.S. West Texas Intermediate crude futures were down $1.18, or 3.3%, to $35.08 a barrel.

A cluster of infections in Beijing has increased concern of a resurgence of the disease. The coronavirus pandemic started at the end of last year in the Chinese city of Wuhan.

The oil benchmarks fell about 8% last week, their first weekly declines since April, as U.S. coronavirus cases started increasing. Over the weekend, more than 25,000 new U.S. cases were reported on Saturday alone as more states reported record new infections and hospitalizations.

“The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought,” ING Economics said in a note.

Industrial output in China, the world’s biggest crude oil importer, rose for a second consecutive month in May but the rise was smaller than expected, suggesting the world’s second-biggest economy is struggling to get back on track after containing the coronavirus.

The country’s refineries increased their throughput in May by 8.2% more than the same period a year ago to about 13.6 million barrels per day (bpd), government data showed.

An OPEC-led monitoring panel will meet on Thursday to discuss ongoing record production cuts and see whether countries have delivered their share of the reductions, but will not make any decision, according to five OPEC+ sources.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have been reducing supplies by 9.7 million bpd, about 10% of pre-pandemic demand, and agreed in early June to extend the cuts for a month until end-July.

Iraq, one of the laggards in complying with the curbs, agreed with its major oil companies to cut crude production further in June, Iraqi officials working at the fields told Reuters on Sunday.

The country’s oil minister later said it would export an average of 2.8 million bpd in June.